Clean tanker floating storage interest renewed
Charterers have shown renewed interest in floating storage for oil products in Europe, as freight rates have fallen significantly since April, despite the contango price structure having flattened from last month.
Gunvor's chartering arm Clearlake put the Zantoro on subjects this week to store a 90,000t cargo near Europe for 45-90 days at $34,000/d with delivery in Gibraltar and redelivery in the Mediterranean or northwest Europe. And other firms are also offering cargoes for storage or for voyages with an option of storage instead, shipbrokers said. Trading firm Trafigura is seeking a ship for a 60,000t-80,000t diesel cargo in the North Sea with storage options for 30-90 days. Glencore's ST Shipping is also offering a 90,000t short-haul diesel cargo with a 30-90 day storage option and Total is looking to store jet fuel in west Africa for 30-90 days, according to market participants.
But as with previous storage deals on offer, charterers looking to have storage as an option probably want flexibility in case floating storage economics become viable. One shipbroker said the cargoes are "very much opportunities" for charterers but "not firm" and that they would take a vessel for storage "if the numbers [shipowners] offer make financial sense".
At $34,000/d, Clearlake would effectively pay just under 38¢/t a day for a 90,000t intake, before accounting for other operational costs such as bunkers, insurance and port costs. Prompt fob French diesel prices closed at $289.25/t yesterday, while Ice June gasoil settled at $299.50/t, and Ice July gasoil at $311.25/t. The discount of prompt diesel prices to the July contract is $22/t. If the ship loaded today and discharged on 13 July, one day after the expiry of the contract, Clearlake would pay $20.02/t in chartering costs to store the cargo for 53 days. But a charterer booking a ship now would probably load the cargo later than today, requiring fewer days of storage, assuming there are no logistical issues to delay discharging. This means that storage plays could be profitable for charterers, depending on how much risk can be mitigated.
The contango price structure on gasoil remains relatively steep, but flattened from earlier weeks, as countries started slowly lifting Covid-19 lockdowns. But freight prices were extremely high in April which made it increasingly difficult for traders looking for a time-spread arbitrage window by storing products. Storage bookings slowed as a result, the Argus floating storage bookings database shows. But in the past few weeks, freight prices have fallen more quickly than the prompt diesel discount to second month prices. The prompt French NWE diesel to second month gasoil discount fell by 55pc from 27 April to 20 May, while the Mediterranean to Japan LR2 freight rate fell by 69pc in the same period.
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German distillate demand rises as prices drop
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Oil rises as Israel-Hezbollah clash fuels uncertainty
Oil rises as Israel-Hezbollah clash fuels uncertainty
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Canadian labor board orders rail service to resume
Canadian labor board orders rail service to resume
Houston, 25 August (Argus) — Canada's two Class I railroads avoided a crippling extended work stoppage on Saturday, after an independent labor board upheld the Canadian government's order for the railroads to enter binding arbitration with a labor union representing more than 9,000 rail employees. The Canada Industrial Relations Board (CIRB), in two separate orders, directed the Teamsters Canada Rail Conference (TCRC) to enter binding arbitration with the nation's two Class I railroads — Canadian Pacific Kansas City (CPKC) and Canadian National (CN). The order heads off an extended work stoppage that would have echoed across North American supply chains for virtually all commodities, from crude, refined products, LPG and coal to fertilizers like potash, as well as consumer and industrial goods. Virtually all railed shipments carried by CN and CPKC came to a grinding halt early on 22 August after months-long talks between the railroads and the TCRC hit an impasse. Later the same day, the Canadian government stepped in to force parties into binding arbitration, but the TCRC said it would not abide by the directive without a ruling from the CIRB. In its rulings, the CIRB ordered CN and CPKC employees represented by the TCRC to resume their duties as of 12:01 am EDT on 26 August and remain "until the final binding interest arbitration process is completed". The CIRB also ruled that no further labor stoppages, including lockouts or strikes, could occur during the arbitration process, effectively voiding a TCRC strike notice issued on 23 August for CN workers set to take effect on 26 August. CN and CPKC said they will comply with the CIRB order, and CPKC asked TCRC employees to return to work on 25 August "so that we can get the Canadian economy moving again as quickly as possible and avoid further disruption to supply chains". The TCRC said it would comply with the CIRB decision, even though it sets a "dangerous precedent". TCRC plans to appeal the ruling in federal court. "The ruling signals to corporate Canada that large companies need only stop their operations for a few hours, inflict short-term economic pain, and the federal government will step in to break a union," TCRC president Paul Boucher said. "The rights of Canadian workers have been significantly diminished today." It could take weeks for Canadian rail operations to return to normal. CPKC said it could take several weeks for its rail network to fully recover from the work stoppage and even longer for supply chains to stabilize. Canadian railroads last week embargoed shipments of toxic materials and earlier this week stopped loading any new railcars. By Chris Baltimore Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Union plans new rail strike despite order: Update
Union plans new rail strike despite order: Update
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